Nokia Gains Give LG Pains

Meanwhile, Motorola has been turning skeptics into believers ever since it introduced its half-inch-thick Razr phone. The sleek metal design hit a winning note with phone buyers, helping the company increase its market share in the past two quarters.

"For Motorola, there's no question, a single product has reinvigorated the whole brand," says Wood.

But close behind Motorola is Samsung, which recently unveiled its own ultrathin flip phone aimed directly at the Razr.

The clash between the big three phone titans has made it particularly difficult for the rest of the pack.

Some players, like Panasonic, have abandoned markets including the U.S. Others, like Alcatel (ALA Quote) and Siemens (SI Quote), have abandoned the wireless phone business altogether.

"If Siemens can't make money selling 50 million units a year," says Wood, "then I think that's a sign of trouble for the others selling less."